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In the classic disaster flick The Towering Inferno, partygoers ignored a fire in a storage room because they assumed it had been contained. Are U.S. investors making the same mistake with China?

Consider: The Standard & Poor's 500-stock index hit new highs last week, as it responded to Federal Reserve Chairman Ben Bernanke's comments to Congress suggesting that scaling back the Fed's bond buying is no sure thing. In doing so, the benchmark index ignored the fact that China -- once considered the world's growth engine but now acting like it needs a tune-up just to keep it from stalling -- reported last Monday that its economy had grown at a 7.5% clip, well below its 15-year average of 9%.

Rather than being jarred by the news, however, U.S. investors shrugged. The S&P 500 edged up 0.1% last Monday and by the end of the week the benchmark index had gained 0.7% to close at 1692.09, a new all-time high. That's a far cry from the reaction just three months ago, when China reported a 7.7% rise, and the S&P 500 fell 2.3%.

Why the change of heart? Unlike three months ago, when investors were placing big bets that China's policy makers would pump cash into the economy to spur growth, the market seems to have accepted the fact that sluggish growth for the world's second-largest economy is its new normal. Indeed, the People's Bank of China has been forecasting that growth would moderate to 7.5% for some time.

But that 7.5% target may prove optimistic. China's leaders are forcing the economy to undergo a radical transformation. Gone are the days of booming exports and debt-funded infrastructure spending. Instead, China wants to see consumers spend more of their hard-earned cash and its businesses reduce their reliance on easy money. Success could mean growth well below target.

That should worry investors. The S&P 500's big gains this year have been driven by rising price/earnings ratios, not rising earnings, says Deutsche Bank strategist David Bianco. The index now trades at 15 times 2013 earnings, up from 13 times one year ago.

But there's a limit to how much investors will pay for stocks, which means the S&P 500 could need an earnings boost if it's to head much higher. That will be tough if China continues to disappoint. The Asian giant accounts directly for some 5% of S&P 500 earnings, Bianco says. And while that might not seem like a lot, it's a bigger chunk than the 2% that comes from housing. Throw in China's massive influence on commodity prices, and the effect of a slower China could really be felt.

That used to be considered an advantage. During the first three months of the year, Las Vegas Sands gained 22%, while MGM rose just 13%. In the second quarter, however, it was a liability. Las Vegas Sands lost 6% during that period, while MGM gained 12%.

Yet gamblers keep hitting the tables in record numbers in Macau. Gross gaming revenue hit a record $10.8 billion during the second quarter, and sales grew at a 15% clip. No one expects it to continue at such a rabid pace, but there's no reason it can't keep growing at, say, close to 11% during the rest of the year, says RBC Capital Market's John Kempf, even if China slows further.

That's in part because Macau is still in its infancy compared with gambling meccas like Las Vegas. Just 1.3% of mainland Chinese have visited the casinos. As more make the trip, that could offset economic weakness in China.

Meanwhile, Las Vegas Sands is set to report earnings on July 24, and it could very well beat analyst forecasts. Its shares might be worth the gamble.